In the event of bankruptcy, owners of joint-stock companies lose

1. Analyze the question The question asks what shareholders (owners) of a joint-stock company stand to lose if the company goes bankrupt. This is about the concept of limited liability.

2. Explain the concept A joint-stock company (such as a public limited company, PLC) is a separate legal entity from its owners. Its owners are shareholders who buy shares in the company.

• Limited liability means a shareholder's responsibility for the company's debts is limited to the amount they invested (the value of their shares).
• The company's debts belong to the company, not to the shareholders personally.
• Creditors can claim only the company's assets. They cannot go after the shareholders' private properties such as their houses, cars, or personal savings.

This is different from sole proprietorships and ordinary partnerships, where owners have unlimited liability and may lose personal property to pay debts.

3. Solution, option by option

• A. Their private properties: Wrong. Limited liability protects private assets.
• B. Both company and private assets: Wrong. This describes unlimited liability, as in a sole trader or ordinary partnership.
• C. Only the capital invested: Correct. Shareholders lose only what they put in, meaning the value of their shares, which become worthless.
• D. Only their dividends: Wrong. Dividends are the profit share paid out. In bankruptcy, the loss is the invested capital itself, not just the expected dividends.

4. Answer The correct option is C. only the capital invested.

5. Exam tip Link the words: Joint-stock = Limited liability = lose only what you invested. Whenever a question contrasts company owners with sole traders or partners, remember that sole traders and partners risk personal property (unlimited liability), while shareholders risk only their shares.